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The Growing Presence of Chinese Investment in Africa: The Motivations and ImplicationsDanielle Daley & Hermila Yifter

2+Introduction

As Chinese outward direct investment in African nations increase, we want to answer the following: What attracts Chinese investment? Do polity and natural resources play a significant role in this

attraction? More importantly, how does Chinese investment affect

economic growth?

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3+Road Map

We will discuss the background of China’s growing role as an economic world power, the world’s growing interest in Africa, and the Sino-African relationship.

We will then discuss our theory and hypothesis regarding how polity and natural resources influence China to invest and the implications on economic growth.

We will then discuss our methodology and explain our results.

Lastly, we will discuss the significance of our research and our future work.

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4+Background/Debate

To begin with, China’s growing economic leverage and political influence has been seen by many African countries as an alternative investment and trading partner in Africa’s growing presence in the world. “strictly-business” style of cooperation vs. “conditions”

China's FDI in Africa is growing rapidly: it went from $20 million a year in the early 1990s, grew to $100 million in 2000, and reached up to $1 billion a year in 2006

If China’s economy surpasses that of the United States’ economy, which its GDP growth rate suggests, then there is major possibility that it will “become a leading investor in Africa” (Klaver and Trebilcock, 169, 170).

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+What factors does

China consider when they decide

to invest in specific African

nations?

+We hypothesize that polity plays no role in determining which African nation China invest in.

7+Hypothesis: Polity

Sudan- Authoritarian Government ( Darfur Crisis)

Angola- Republic; Multi Presidential Regime

South Africa-Constitutional Parliamentary Republic

Algeria- Semi- Presidential Republic

Nigeria-Federal Republic

8+Methodology: Polity

Not Statistically Significant

+We hypothesize that natural resources “are at the core of China’s economic interests in Africa―or perhaps even tis overall interest in the continent” (Tull 465).

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Hypothesis: Natural Resources

“Africa’s resource rich countries are in a position to provide an ample percentage of China’s requirement.” (Tull 465)

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Natural Resources: Oil

$360 Billion 13 Million

2020

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Natural Resources: Agriculture

7%

Mozambique Mawali

1,338,299,500

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Natural Resources: Precious Metals

Democratic Republic of Congo & Zambia

South Africa & Algeria

Copper & Cobalt

Iron Ore & Platinum

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Methodology: Natural Resources

Not Statistically Significant

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We hypothesize that there is a positive correlation between increased Foreign Direct Investment (FDI) and GDP (per) capita.

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Hypothesis: Relationship between Chinese FDI & Economic Growth in Africa “…aid and investment in infrastructure are bringing

desperately needed capital to the continent” (Zafar 103).

Chinese government officials “have been cautious to stress that their foreign policy was not a sort of “charity” it is one based on “mutual benefit.” (Deborah and Adam Gaye).

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Hypothesis: Relationship between Chinese FDI & Economic Growth in Africa ‘“the Chinese government is not only fulfilling its aid

promises to Africa,” a Zambian policy-maker noted, “but it is also encouraging Chinese companies to invest in infrastructure development in Africa.”’(Isaac Idun-Arkhurst and James Laing 17).

Additionally, with Chinese increased investment in Africa, projects there were never completed, are being revived at a lower cost.

And more importantly, with China’s increased interest in the region, more and more nations are recognizing Africa’s potential in the future.

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Methodology: Relationship between Chinese Foreign Direct Investment & Economic Growth in Africa

Not Statistically Significant

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Conclusion

China is not influenced by the presence of natural resources or the type of government an African nation has. What is the motive then? Are the lack of conditions and

concern for regime healthy for the economic growth of an African nation?

Is China “ambulance-chasing”?

How will China’s role as the “alternate” influence future relationships among African nations and the West?

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Future Work

Limited Data- Relatively New Topic of Discussion

Exports and Imports

Explore other reasons why China is investing in Africa